BUCKSPORT — The union representing 58 workers at the Bucksport paper mill Verso closed in December 2014 has asked a federal judge to require resale of the mill to a paper maker or make stricter its settlement that allowed Verso to buy its larger competitor, NewPage.
The International Association of Machinists and Aerospace Workers on Friday filed its objection to the Department of Justice settlement that allowed the $1.4 billion Verso-NewPage merger to move ahead, as long as NewPage sold its mills in Rumford and Biron, Wisconsin.
But with those deals complete and auction of the Bucksport mill equipment planned for March 24, it’s unclear if the legal objection will have any influence over scrap metal recycler American Iron & Metal’s plans to salvage the paper mill.
AIM owns the property and — with another entity owning the papermaking equipment — even those waging the antitrust battle against Verso said the fate of the Bucksport mill is almost assuredly sealed.
“It seems at that point [of the auction], you’ve hit the ‘Humpty Dumpty’ point, where it wouldn’t be possible to put it back together again,” said Donald Baker, a Washington, D.C.-based attorney for the union and former head of the Justice Department’s antitrust division.
Baker said it’s unlikely that the Justice Department will respond to comments on the terms of its antitrust settlement with Verso by March 24. And that’s necessary before the judge in the case can weigh in.
Kimberly Tucker, a Lincolnville-based attorney representing the union, penned the letter to the Justice Department contesting the settlement and arguing that the Justice Department’s review was too narrowly focused on Verso and NewPage’s operations in 2014.
“This myopic 2014-centric focus on events and actions failed to put this merger in a realistic (and accurate) competitive context,” Tucker wrote, arguing that Verso’s hedge fund owner Apollo Global Management had since NewPage’s bankruptcy sought such a merger and used influence as a holder of NewPage debt to try to make that happen.
The company fought similar antitrust allegations in federal court in Maine, attempting to stop the $58 million sale to AIM. It lost.
The comments to the Justice Department could be rebuffed by the court and department, leaving unchanged the terms of the merger, which resulted in NewPage selling its Rumford and Biron, Wisconsin, mills to the Canadian Catalyst Paper Corp. That transaction was completed in early January alongside the Verso-NewPage merger.
At the other end of the spectrum of possibilities, the Justice Department could withdraw its settlement — a circumstance Baker said he could not recall happening during his tenure — or the judge could find the terms of the settlement conflict with the public interest and order modifications to the terms, which could then be fought in court.
In the complaint, Tucker argues that the merger has already had results against the public interest, with both Verso and Catalyst raising prices in January, according to the industry publication Pulp and Paper Week. The publication reported Verso notified customers it was raising prices $20-$40 per ton for all orders shipping after March 2.
“The fact that they raised those prices with such impunity while the 60-day period was still open reflects just why this really is a violation of the anti-trust law,” Tucker said in a telephone interview.
After the merger with NewPage and sale of the Rumford mill, Verso owns one Maine mill — in Jay.
Tucker said while it’s unlikely that the objection to the settlement would cause the court to “unring the bell” on the Verso-NewPage merger, she felt obligated to make the argument and, at the very least, press for a more detailed explanation from the Justice Department about why it didn’t include Bucksport or Verso and NewPage mills shuttered in Kimberly, Wisconsin, and Sartell, Minnesota, in the antitrust review.
“I could not in good conscience let it happen without an objection, no matter how unlikely I think that the objection will succeed,” Tucker said. “If we don’t ask, then we only have ourselves to blame.”
An issue looming over the case was whether there were serious interested buyers in the mill at the time of AIM’s bid. Verso CEO David Paterson denied such claims in an affidavit in the federal case in Maine, but state officials from the governor’s office have said there were interested parties willing to at least take a look at the mill assets.
A Justice Department official was not immediately available Monday morning to say whether other parties had filed objections to the settlement agreement before a March 13 deadline.
According to a December filing, the department will submit those comments and its responses to the court before it may ask the court to give final approval to the settlement.
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